Wednesday, May 7, 2014

Explaining The Market

Sumit Singh pointed out an article on Business Insider on 50 truths of market. The full article is worth reading, while here are a few interesting takeaways.

(1) Markets go through at least one big pullback every year, and one massive one every decade. Get used to it. It's just what they do.

(2) As Erik Falkenstein says: "In expert tennis, 80% of the points are won, while in amateur tennis, 80% are lost. The same is true for wrestling, chess, and investing: Beginners should focus on avoiding mistakes, experts on making great moves."

(3) Not a single person in the world knows what the market will do in the short run. End of story.

(4) The analyst who talks about his mistakes is the guy you want to listen to. Avoid the guy who doesn't — his are much bigger.

(5) The majority of market news is not only useless, but also harmful to your financial health.

(6) Professional investing is one of the hardest careers to succeed at, but it has low barriers to entry and requires no credentials. That creates legions of "experts" who have no idea what they are doing. People forget this because it doesn't apply to many other fields.


(7) The more someone is on TV, the less likely his or her predictions are to come true.

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